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Splunk (SPLK) Beats Q3 Earnings Estimates on Solid Revenues
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Splunk Inc. reported solid third-quarter fiscal 2024 results, with the bottom and the top lines beating the respective Zack Consensus Estimate. The company’s expense-control strategy and focus on improving operational efficiency supported the bottom line. Splunk is witnessing healthy traction in the cloud business accounting for the bulk of total annual recurring revenues (ARR). The company reported higher revenues year over year, driven by rising customer engagements, continuous innovation and a robust product portfolio.
Net Income
On a GAAP basis, the company incurred a net income of $96.9 million or 55 cents per share against a net loss of $32.6 million or a loss of 20 cents per share in the prior-year quarter. The improved performance was primarily attributable to top-line growth.
Non-GAAP net income in the reported quarter was $283.5 million or $1.55 per share, which beat the Zacks Consensus Estimate by 43 cents.
Total revenues in third-quarter fiscal 2024 increased to $1,067.4 million from $929.8 million in the prior year. The top line surpassed the consensus estimate of $1,028 million. The revenue growth was driven by positive demand trends in cloud services, cybersecurity and observability domains. Backed by its enterprise scale and unified product portfolio, Splunk witnessed significant customer additions and several project wins in the public and private sectors.
Cloud services revenues rose to $469.4 million from $374 million in the year-ago quarter. The uptick was propelled by rising demand for its cloud services. License revenues were $429.4 million, up from $383.6 million. Net sales from Maintenance and services decreased to $172.2 million from $168.6 million in the year-ago quarter.
Total ARR was $4 billion, up 15% year over year. The company had 851 customers with an ARR of more than $1 million at the end of the third quarter. Cloud ARR increased 26% year over year to $2 billion.
Other Details
Gross profit increased to $857.4 million from $728 million in the prior-year quarter. Non-GAAP gross margin from cloud services reached an all-time high of 74.6%, surpassing management’s expectations. Non-GAAP operating income aggregated $331.6 million compared with $198.4 million in the prior-year period, with respective margins of 31.1% and 21.3%.
Cash Flow & Liquidity
During the first nine months of fiscal 2024, Splunk generated $587 million net cash from operating activities compared with $173.6 million in the year-ago period. As of Oct 31, 2023, the company had $928 million in cash and cash equivalents with $3,104.9 million in long-term debt.
Comtech Telecommunications Corp. (CMTL - Free Report) , carrying a Zacks Rank #2 (Buy), is a solid pick. Headquartered in Melville, NY, the company is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 20.4% and delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) carries a Zacks Rank #2. It has a long-term earnings growth expectation of 24.8% and delivered an earnings surprise of 14%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.
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Splunk (SPLK) Beats Q3 Earnings Estimates on Solid Revenues
Splunk Inc. reported solid third-quarter fiscal 2024 results, with the bottom and the top lines beating the respective Zack Consensus Estimate. The company’s expense-control strategy and focus on improving operational efficiency supported the bottom line. Splunk is witnessing healthy traction in the cloud business accounting for the bulk of total annual recurring revenues (ARR). The company reported higher revenues year over year, driven by rising customer engagements, continuous innovation and a robust product portfolio.
Net Income
On a GAAP basis, the company incurred a net income of $96.9 million or 55 cents per share against a net loss of $32.6 million or a loss of 20 cents per share in the prior-year quarter. The improved performance was primarily attributable to top-line growth.
Non-GAAP net income in the reported quarter was $283.5 million or $1.55 per share, which beat the Zacks Consensus Estimate by 43 cents.
Splunk Inc. Price, Consensus and EPS Surprise
Splunk Inc. price-consensus-eps-surprise-chart | Splunk Inc. Quote
Revenues
Total revenues in third-quarter fiscal 2024 increased to $1,067.4 million from $929.8 million in the prior year. The top line surpassed the consensus estimate of $1,028 million. The revenue growth was driven by positive demand trends in cloud services, cybersecurity and observability domains. Backed by its enterprise scale and unified product portfolio, Splunk witnessed significant customer additions and several project wins in the public and private sectors.
Cloud services revenues rose to $469.4 million from $374 million in the year-ago quarter. The uptick was propelled by rising demand for its cloud services. License revenues were $429.4 million, up from $383.6 million. Net sales from Maintenance and services decreased to $172.2 million from $168.6 million in the year-ago quarter.
Total ARR was $4 billion, up 15% year over year. The company had 851 customers with an ARR of more than $1 million at the end of the third quarter. Cloud ARR increased 26% year over year to $2 billion.
Other Details
Gross profit increased to $857.4 million from $728 million in the prior-year quarter. Non-GAAP gross margin from cloud services reached an all-time high of 74.6%, surpassing management’s expectations. Non-GAAP operating income aggregated $331.6 million compared with $198.4 million in the prior-year period, with respective margins of 31.1% and 21.3%.
Cash Flow & Liquidity
During the first nine months of fiscal 2024, Splunk generated $587 million net cash from operating activities compared with $173.6 million in the year-ago period. As of Oct 31, 2023, the company had $928 million in cash and cash equivalents with $3,104.9 million in long-term debt.
Splunk currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
Comtech Telecommunications Corp. (CMTL - Free Report) , carrying a Zacks Rank #2 (Buy), is a solid pick. Headquartered in Melville, NY, the company is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers.
Comtech’s key satellite earth station modems incorporate forward error correction and bandwidth compression technologies, which enable its customers to optimize their satellite networks by either reducing their satellite transponder lease costs or increasing data.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 20.4% and delivered an earnings surprise of 12%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) carries a Zacks Rank #2. It has a long-term earnings growth expectation of 24.8% and delivered an earnings surprise of 14%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.